CBS: Insurance co-ops scrambling away from individual market

posted at 12:41 pm on October 30, 2013 by Ed Morrissey

After a month of the ObamaCare fiasco, insurers find themselves staring into the abyss of the “death spiral” — the risk-pool meltdown of accepting too many high-maintenance consumers without enough low-maintenance consumers to spread the costs. CBS Evening News focused on one such insurer, a new co-op in Maryland that got its start from a $65 million federal loan and planned on marketing mainly within the ObamaCare exchange. After a few days of watching HHS flounder, the CEO threw out that business plan entirely.

How many enrollees has he seen in a month? Maybe a dozen, and he needs 15,000 by the year’s end in order to break even:

The 23 small co-ops across the country that are part of the Affordable Care Act exchanges are intended to provide competition. As they adjust to stay afloat, some analysts worry that Obamacare, as designed, might not.

Their biggest fear is that with the website problems, more of the people who enroll will be the sickest and most motivated. If that happens, insurers would have no choice but to raise premiums and that could cause more healthy customers to flee.

In the insurance industry, that’s known as the “death spiral” — and experts say if that were to come to pass, the Obamacare business model would collapse.

Beilenson says he only knows for sure of a dozen people signing up for Evergreen so far.

“If we have 1,000 members at the end of the year, that will be a problem, but we thing we’re far along in our business planning and we expect to have about 15,000 or so, which would be our break-even (point),” he said.

The Obama administration tried to spark the creation of enough co-ops to give people a wider range of choices, especially in rural areas. So far that’s been a bust, as the New York Times reported last week and CBS confirmed on Monday. Fifty-eight percent of the counties serviced by the federal exchange only have one or two insurers offering plans, even with the hundreds of millions loaned out to these co-ops.

That, however, is a secondary consideration for Evergreen and its CEO. If he can’t sign up more than a dozen a month, or even a dozen a day, he’s going to be out of business — and he won’t be the only one looking at a death spiral, either. Small wonder they’re looking for corporate business, but that’s not a natural market for smaller co-ops, especially not those who picked the wrong business plan in the beginning.

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The 23 small co-ops across the country that are part of the Affordable Care Act exchanges are intended to provide competition. As they adjust to stay afloat, some analysts worry that Obamacare, as designed, might not.

You cannot plan a free market. A free market is organic and comes into being by individuals making free choices.

insurers find themselves staring into the abyss of the “death spiral” — the risk-pool meltdown of accepting too many high-maintenance consumers without enough low-maintenance consumers to spread the costs.

conversely, find themselves in the midst of the ClusterFarkNado that is Obamacare…..

Their biggest fear is that with the website problems, more of the people who enroll will be the sickest and most motivated. If that happens, insurers would have no choice but to raise premiums and that could cause more healthy customers to flee.

No kidding. This was entirely foreseeable. People with cancer will stay on the line for a weeks straight until they can get coverage. A healthy person? Why on earth would they do that?!?

According to the law insurers have until tomorrow to bail out of the obamneycare program. Let’s see who bails and who stays. Probably the reason Oboobi met with the ceos a while back to make it clear that they best not bail on the program or else the meerkat will come a calling with trumped up charges.

Remember back in the good old days of a couple of weeks ago when people were complaining that the shutdown was making the Obamacare rollout a non-issue? Good times, good times. Now, the GOP is on the record as having gone to the mat against Obamacare (even though, let’s face it, they didn’t – but that is the LIV perception). Consider that the prologue to this developing tragedy.

The issue is, and always has been, that if the insurers are forced to cover all pre-existing conditions at no extra cost and healthy individuals don’t sign up, they will not be viable. And they will cease to exist. And we will end up with single payer. Single payer – that is essentially what the GOP is fighting for with their “delay” tactic.

Their biggest fear is that with the website problems, more of the people who enroll will be the sickest and most motivated. If that happens, insurers would have no choice but to raise premiums and that could cause more healthy customers to flee.

No kidding. This was entirely foreseeable. People with cancer will stay on the line for a weeks straight until they can get coverage. A healthy person? Why on earth would they do that?!?

besser tot als rot on October 30, 2013 at 12:56 PM

Won’t matter much – with the death panels near – most cancers will be a terminal disease.

Live for today – spend all of your money now because it won’t be worth anything next year.
If you have cancer – go to Vegas, get layed, get drunk and get loud…..

The issue is, and always has been, that if the insurers are forced to cover all pre-existing conditions at no extra cost and healthy individuals don’t sign up, they will not be viable. And they will cease to exist. And we will end up with single payer. Single payer – that is essentially what the GOP is fighting for with their “delay” tactic.

I’ll help him with the numbers. He needs 250 A DAY, EVERY DAY from now until Jan. 1 to meet the 15,000 goal. Further a lot of those have to be healthy people. A dozen in a month? He’ll have 36 people signed up by Christmas.

Do you mean a couple flips of the calender, or do you mean a short train ride? Or both?

oldroy on October 30, 2013 at 1:32 PM

oldroy, now that you’ve mentioned the “train ride,” I’m forced to re-post what I posted in another thread, on this day –

I won’t be getting on any train. It would be my duty to take at least one with me.

Murphy9 on October 30, 2013 at 12:34 PM

But you’ll love the choo choo ride. The scenery is really pretty [through the bars], and the destination is like nothing you’ve ever seen before. And you’ll have lots of company. And it’s not too bad, standing. The smell of the cowshit and hay is intoxicating.

The issue is, and always has been, that if the insurers are forced to cover all pre-existing conditions at no extra cost and healthy individuals don’t sign up, they will not be viable. And they will cease to exist. And we will end up with single payer. Single payer – that is essentially what the GOP is fighting for with their “delay” tactic.

besser tot als rot on October 30, 2013 at 1:01 PM

Not really. The fact that the MSM are reporting on anywhere from 2 to 16 million people are being forced off individual health insurance on January 1 due to Obamacare, and the fact that the Continuing Resolution needs to be renewed in January gives the GOP an opportunity.

Sebelius has tried to defend this by saying that the individual mandate “only” affects 5% of the population (“only” 16 million people), but Republicans can turn this around by saying that if the individual mandate has caused 16 million people to lose their health insurance, how much worse will it be next year when the employer mandate kicks in and this problem is multiplied by 10 or 15, affecting over 100 million people?

Republicans need to be playing up this issue in Congressional hearings and the media as long as they can, and let voter anger against Obamacare snowball. Then, sometime in late November or early December, BEFORE the 16 million people lose their insurance, they propose a bill whereby all existing individual health insurance policies are “grandfathered”, and attach it to the Continuing Resolution. Take it or leave it, Democrats, or shut down the Government. If Obamacare looks disastrous enough, enough Senate Democrats might jump on board to pass the bill through the Senate, leaving Obama with the choice of either vetoing the bill and shutting down the Government to save Obamacare, or having Obamacare defanged.

Murphy9, you are not alone. Many still are not seeing it. Mainly I feel not because they are in
denial, but because it is quite difficult to have a devious mind. For an honest person that is.
Bmore on October 30, 2013 at 1:24 PM

I never got to marry or have kids. I sure as hell am not doing either of those things now.

Sadly, fewer the liabilities the better. To take care of ones self is hard enough. Still though, the correct better half does mean twice the abilities and half the effort. Can be twice as rewarding as well. ; )

Then, sometime in late November or early December, BEFORE the 16 million people lose their insurance, they propose a bill whereby all existing individual health insurance policies are “grandfathered”, and attach it to the Continuing Resolution.

Steve Z on October 30, 2013 at 1:43 PM

But the insurance companies have already cancelled the plans. That’s what their letter says. What do we gain by allowing people to keep insurance plans that the insurance companies have already cancelled (in accordance with Obamacare). Those plans won’t magically re-materialize. They’re gone. The insurance companies haven’t priced or underwritten those plans for next year. The GOP has absolutely no plan to deal with this and, frankly, doesn’t even seem to realize that any of these problems even exist. It’s like telling a 3 year old to go get the barbecue ready.

The GOP has absolutely no plan to deal with this and, frankly, doesn’t even seem to realize that any of these problems even exist. It’s like telling a 3 year old to go get the barbecue ready.

besser tot als rot on October 30, 2013 at 1:50 PM

Yep. Can’t. Go. Back. Damage is done. It will take years to unravel the mess. If immigration is delayed until after the elections, there is a sliver of hope this gets repealed. And if immigration is dealt with like the rest of the world does, including Mexico, maybe we have a sliver of hope of surviving.

If immigration is shoved through before the election. We’re screwed – end of the American story.

Not only that, a high-ranking BlueCross/BlueShield representative told a conference of business leaders back in January: Their corporate stand was that the California Exchange would not work for a profit-making enterprise; and to protect their stakeholders, BCBS would not participate in the “Cover California” Exchange.

California’s response: Can you just say you are ‘thinking about it’, so we can keep you listed on our roster while we canvass the other carriers?